Utility With Choice Seeks Change in Commodity Supply Purchasing Plan To Mitigate Price Volatility

Boston Gas Company and Colonial Gas Company d/b/a National Grid requested that the Massachusetts Department of Public Utilities authorize a change in National Grid's gas purchasing practices designed to mitigate natural gas price volatility

National Grid requests approval to modify its gas purchasing plan to execute an Alternative Hedge contract under certain circumstances to ensure more effective hedges than would be possible under the current programmatic approach based upon NYMEX Henry HUB (HH) fixed price swaps

National Grid said that NYMEX HH will continue to be used as the Default Hedge strategy to hedge gas purchases from the Gulf region, and Dominion Appalachia (DTI South Point) Locational Basis hedges and NYMEX HH Swap or Index Hedge Swaps will be used for Alternative Hedge Contracts for Marcellus Region Forecasted Purchase Points. When applicable, National Grid will assign the most appropriate Index Price to a Forecasted Purchase Point to perform the correlation evaluation, consistent with the selection criteria identified in Exhibit A to its application.

See more details on National Grid's proposed hedging policies here

National Grid had previously submitted a proposal, in a proceeding which was ultimately closed without approving the change, to the Department to implement a change in its gas procurement practices by adding alternative locational fixed price swaps to the NYMEX HH fixed price swaps used to lock in gas prices to address the uncertainty caused by the growing disconnect between the NYMEX HH benchmark index and the various geographic sources of natural gas supplies, including the Marcellus region of New York, Pennsylvania, West Virginia and parts of Ohio. National Grid said that the newly proposed changes result from continued discussions with parties as a result of its prior filing. National Grid said that the state's Attorney General supports the new proposal

"Since its initial implementation in 2003 and as modified in 2006, the Company’s purchasing plan has had a beneficial impact in terms of stabilizing the cost of gas procured on behalf of customers. The Company submits that the flexibility to execute an Alternative Hedge contract will match more closely the forecasted purchase locations and will enhance the Company’s ability to mitigate price volatility for its customers," National Grid said

Docket 17-106